Dynamic Correlation between the RMB Exchange Rate and China's Import and Export Trade before and after the COVID-19 Pandemic

Yao Cui

doi:10.62051/ijgem.v5n3.11

Authors

Yao Cui

DOI:

https://doi.org/10.62051/ijgem.v5n3.11

Keywords:

The COVID-19 pandemic, The real effective exchange rate, Import and export trade, VAR model

Abstract

This research employs data on the real effective exchange rate of the Renminbi, alongside aggregate import and export statistics, to construct a vector autoregression model. The objective of this investigation is to look into the dynamic interplay between the CNY currency rate and trade flows amidst the COVID-19 pandemic. The research reveals a persistent equilibrium connection between the REER, import volumes, and export volumes. Moreover, import trade is subject to Granger causality influence from changes in the real exchange rate of the RMB, suggesting that this exchange rate significantly affects fluctuations in total imports. Further analysis reveals that the impact of imports and exports on fluctuations in the RMB exchange rate is relatively minor. However, the impact of the Renminbi exchange rate on trade flows is increasingly considerable and becomes more clearly observable over an extended period.

Downloads

Download data is not yet available.

References

[1] Qi Yasha. (2011). Research on the Dynamic Correlation between the RMB Exchange Rate and China's Import and Export Trade - An Empirical VAR Analysis of the RMB to USD Exchange Rate and Import and Export Trade before and after the Financial Crisis. Economist, (9), 3.

[2] Xu Yanling & Jiao Yongbing. (2012). The Impact of the RMB Exchange Rate on FDI - A Dynamic Analysis Based on the VAR Model. Price Monthly, 000(007), 40-43.

[3] Liu Ali. (2014). Research on the Impact of the RMB Exchange Rate on Economic Growth Based on the VAR Model. (Doctoral dissertation, Southwest Jiaotong University).

[4] Cao Yang & Li Jianwu. (2006). The Impact of the Real RMB Exchange Rate Level and Fluctuations on Import and Export Trade - An Empirical Study Based on the Years 1980-2004. World Economic Research, (8), 4.

[5] Li Lan. (2022). An Empirical Analysis of the Impact of RMB Exchange Rate Changes on China's Import and Export Trade. Modern Marketing, (5), 4-7.

[6] Guo Huanhuan. (2017). A Dynamic Study on the Impact of Import and Export and RMB Exchange Rate Fluctuations on China's Inflation Based on the VAR Model. Hebei Enterprises, (8), 2.

[7] Xie Qinyin. (2014). Research on the Impact of RMB Exchange Rate Fluctuations on the Structure of China's Export Commodities. (Doctoral dissertation, Anhui University).

[8] Xia Guanjun. (2010). Real Exchange Rate, Import and Export Trade, and Urban-Rural Income Gap in China - A Dynamic Analysis Based on the Structural VAR Model. Economic Geography, 30(4), 6.

[9] Gao Yongxia & GAO Yongxia. (2014). Research on the Linkage Effect of RMB Exchange Rate and Import and Export on Inflation - An Empirical Analysis Based on the VAR Model. Journal of Guangxi University of Finance and Economics, 27(4), 5.

[10] Genc, E. G., & Artar, O. K. (2014). The effect of exchange rates on exports and imports of emerging countries.

[11] Chaudhry, A., & Yuce, A. (2019). Effects of canadian exchange rate volatility on imports and exports. International Journal of Economics and Management Sciences, 8, 1-8.

[12] Duasa, J. (2009). Impact of exchange rate shock on prices of imports and exports. MPRA Paper.

[13] Azu, N. P., & Nasiri, A. (2015). Exchange rate fluctuation and sustainable economic growth in nigeria: var approach. (13).